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home | Topping Behaviors | Failed Move to New Highs After First . . .

Failed Move to New Highs After First Correction

Note:  The historical stock examples given below are for EDUCATIONAL USE ONLY.  They ARE NOT to be used to make buy/sell decisions in today's market.  For more information, please read the HSR Terms of Use.


This price behavior unfolds in four (4) steps:

Step 1:  Price breaks out of a base and has a sharp move higher without many pullbacks.

Step 2:  Price corrects, sometimes rather swiftly.

Step 3Price rallies back to new highs.

Step 4:  Price fails to hold its new high and rolls over.

What you need to know

After a stock has a large advance without many pullbacks, the next move to new highs (coming out of its first correction) may fail because it's too obvious.

The sharp move higher (Step 1) tends to bring a lot of attention to the stock.

When stocks receive a lot of attention, they may top because everyone is expecting to get into the stock after it already had a large move higher.

Historical Stock Chart Examples 1A & 1B:  SanDisk (SNDK) 2005-2006

Click to enlarge 1A

Click to enlarge 1B

To learn more about this behavior, please click here.

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